New York Times Co. Puts Boston Globe Up for Sale

The New York Times Co. building in New York. Photographer: Michael Nagle/Bloomberg

Feb. 21 (Bloomberg) -- New York Times Co. is formally
exploring a sale of the Boston Globe, its only remaining
business outside the core New York Times media brand.

The publisher is working with Evercore Partners Inc. as an
adviser for a sale, Times Co. said yesterday in a statement. The
company intends to focus its strategy and investment on the
Times brand, it said.

Times Co., controlled by the Ochs-Sulzberger family, is
coping with a difficult advertising market as spending on
national campaigns continues to shrink industrywide. The
publisher has sold other assets unrelated to the Times brand,
getting rid of regional newspapers and About.com within the past
13 months.

The company held $955 million in cash and short-term
investments at the end of last year, largely as a result of its
asset sales. In addition to the Boston Globe, the company still
owns the International Herald Tribune, considered the European
edition of the New York Times.

Times Co. slid 1.4 percent to $8.90 at the close in New
York. The shares have risen 4.3 percent this year, compared with
a 5.3 percent gain for the Standard & Poor’s 500 Index.

Chairman Arthur Sulzberger, who appointed former head of
British Broadcasting Corp. Mark Thompson as chief executive
officer in August, has been relying on new revenue sources to
increase profits. National advertising dropped 10 percent across
all newspapers in the first nine months of last year, according
to the Newspaper Association of America.

Circulation Shifts

The Times newspaper now makes more money from readers than
advertisers, helped by its online subscription program, which
now has more than 640,000 paying customers. The Times made $781
million in circulation sales last year, leaving out an extra
week, an 11 percent increase over the previous year. That
compares with a 7.4 percent decline in ad revenue to $700
million for the same period.

The Boston Globe, by contrast, still relies primarily on ad
dollars. The Globe, which also owns regional newspaper Worcester
Telegram & Gazette, reported a 7.8 percent drop in ad revenue
last year minus the extra week to $183 million. That compares
with a 1.7 percent decline in circulation sales to $155.1
million in the same period. The newspaper’s online subscription
program has about 28,000 paying subscribers, 8 percent more than
it did at the end of September.

Times Co. tried to sell the Globe as recently as 2009 to
bidders including an investor group led by Stephen Taylor, a
member of the family that sold the Globe to Times Co. in 1993
for $1.1 billion, according to a person with direct knowledge of
the previous sale process.

Fluctuating Estimates

While at least one bid reached about $33 million in cash,
wildly fluctuating estimates on the Boston Globe’s pension
liability -- ranging from $110 million to $240 million --
scuttled any deal, the person said. Bidders, who would assume
the full pension liability, were unclear on the total value of
the pension. Goldman Sachs Group Inc. advised Times Co. on those
discussions.

Times Co. is now seeking to divorce pension liability from
the sales price, according to another person with knowledge of
the process. That means a current buyer wouldn’t have to assume
the costs of the pension and would therefore be expected to
offer a higher cash bid. Had those same conditions applied in
2009, prospective buyers could have offered more than $100
million in cash, according to the person with knowledge of the
previous deal process.

Eileen Murphy, a spokeswoman for Times Co., declined to
comment.

Times Co.’s total pension plans, including employees of
Times newspaper, were underfunded by about $396 million as of
the end of last year.